Old-age is inevitable. It brings many new changes, and the
most important of all is 'retirement.' Post-retirement, you may have zero or
reduced income. And, during such times taking care of the medical and other
essential expenses can be challenging. This is where investing in a pension
scheme from an early age can act as a saviour.
The government of India has launched many
special pension schemes for senior citizens to provide financial stability and security to them
post-retirement. Let us look at some of the best pension schemes for senior-citizens.
HERE ARE A FEW OF THE TOP PENSION PLANS
FOR SENIOR CITIZENS.
Employee Pension Scheme
The Employees Pension Scheme of 1995, created by
The Employees' Provident Fund Organisation, has its primary objective of giving
employees social security. The old pension plan offers pensions to workers from
organised industries when they retire, which is when they turn 60 years old. Its advantages are only available
to employees who have worked for a minimum of ten years. It is possible for
this to be continuous or not.
5 Pension Schemes For Senior Citizens Offered
By The Government of India
·
APY – Atal Pension
Yojana.
·
NPS – National Pension
System.
·
PMVVY – Pradhan Mantri
Vaya Vandana Yojana.
·
VPBY – Varishtha
Pension Bima Yojana.
·
IGNOAPS – Indira
Gandhi National Old Age Pension Scheme.
1.
APY – ATAL
PENSION YOJANA
While there are many pension schemes in
India, not many of them benefit the low-income groups, especially the employees
from the unorganised sector. But Atal Pension Yojana is an exception. This is a
government-sponsored pension scheme that encourages the workers and labourers
to voluntarily save towards their retirement by making a small contribution
every month.
APY
offers choice of minimum monthly pension guaranteed by Govt. of India of Rs.
1000, Rs 2000, Rs 3000, Rs 4000 and Rs. 5000 per month after 60 years of age.
The Subscriber’s Age should be between 18 - 40
years for joining APY.
It is mandatory to provide nomination and
spouse details in APY account..
Contributions can be made on Monthly or
Quarterly or Half yearly basis through auto debit facility from savings Bank
account.
PRAN,
Transaction Statements and Contribution Under APY Transaction statement and PRAN Card can be
viewed and printed anytime, from anywhere and free of cost by visiting www.npscra.nsdl.co.in.
APY
subscribers can upgrade/downgrade their pension amount once in a financial
year. The feature enables the user to
check the differential amount to be deposited/ to be received back as per the
new guaranteed pension amount chosen.· Higher amount needs to be deposited in case
of upgrade and additional contributions would be returned to the subscribers in
case of down grade.
To
upgrade the pension amount means to increase the pension amount of a subscriber
and to downgrade the pension amount means to decrease the pension amount of a
subscriber.
Benefits of Atal Pension Yojana
- For every contribution made by the
subscribers, the central government an additional 50% of the total
contribution or Rs. 1000 per annum, whichever is lower. The contribution
is made to all the APY subscribers' accounts for five years.
- In the event of the subscriber's
unfortunate death after 60, the nominee of the scheme is eligible to
claim the accumulated amount in the account or the pension money.
- Investment in APY allows the
subscribers to get a monthly pension between Rs. 1000 to Rs. 5000. The
amount depends based on the contributions made by the subscriber.
2.
NPS –
NATIONAL PENSION SYSTEM
it was initially available only for the government employees. In 2009, it was
extended to all the sectors.
All employees, including those in public,
private, and unorganized sectors, are eligible for the NPS, except those who
serve in the armed forces. Subscribers of the NPS are required to contribute a
minimum of Rs. 6000 each fiscal year. Depending on what is more convenient, the
money can be paid in one lump sum or as monthly instalments of Rs. 500.
The NPS is regulated by the PFRDA (Pension Fund Regulatory and Development
Authority), and it is specifically designed to provide financial security to
the senior citizens post-retirement. The scheme allows the subscribers to make
periodic contributions towards their NPS account during the working years and
build a corpus that they can use during their old age.
Benefits of National Pension System
- One of the most significant
benefits of investing in NPS is that it provides inflation-adjusted
returns to the subscribers. A part of the contribution made towards the
NPS account is invested in various market-linked instruments, including
equities. This means the subscribers can get higher returns than the
traditional fixed-income investment options like bank fixed deposit and
APY.
- The NPS requires subscribers to
invest in the scheme until the age of 60 mandatorily. Partial withdrawals
are allowed three years from the date of opening the account but only for
specific purposes like a home purchase, child education, or paying medical
bills. The maximum withdrawal amount permitted is 25% of the total
contribution made.
- To get a monthly pension after
retirement, subscribers to NPS contribute towards their account until
they reach 60 years or retire from their employment. After attaining the
retirement age, the subscriber can withdraw a maximum of 60% of the
accumulated corpus either in lump sum or in a phased manner. The
remaining 40% of the amount must be used to purchase an annuity. The
amount withdrawn in a lump sum is exempt from tax.
NPS is an investment cum pension scheme where a part of the money is invested in the market, thus generating more returns.
Opening of Individual Pension Account under NPS (only Tier I / Tier I & Tier II) by All Indian Citizens (including NRIs) between 18 - 70 years
·
Flexible- NPS offers a range of investment options and
choice of Pension Funds (PFs) for planning the growth of the investments in a
reasonable manner and monitor the growth of the pension corpus. Subscribers can
switch over from one investment option to another or from one fund manager to
another.
·
Simple
– Opening an account
with NPS provides a Permanent Retirement Account Number (PRAN), which is a
unique number and it remains with the subscriber throughout his lifetime. The
scheme is structured into two tiers:
o Tier-I account: This is the non-withdrawable permanent
retirement account into which the regular contributions made by the subscriber
are credited and invested as per the portfolio/fund manager chosen of the
subscriber.
o Tier-II account: This is a voluntary withdrawable account
which is allowed only when there is an active Tier I account in the name of the
subscriber. The withdrawals are permitted from this account as per the needs of
the subscriber as and when required.
·
Portable- NPS provides seamless portability across
jobs and across locations. It would provide hassle-free arrangement for the
individual subscribers while he/she shifts to the new job/location, without
leaving behind the corpus build, as happens in many pension schemes in India.
·
Well
Regulated- NPS is regulated
by PFRDA, with transparent investment norms, regular monitoring and performance
review of fund managers by NPS Trust. The account maintenance costs under NPS
are the lowest as compared to similar pension products across the globe. While
saving for a long-term goal such as retirement, the cost matters a lot as the
charges can shave off a significant amount from the corpus over 35-40 years of
investment period.
·
Dual
benefit of Low Cost and Power of compounding: Till the retirement, pension wealth accumulation grows
over the period of time with a compounding effect. The account maintenance
charges being low, the benefit of accumulated pension wealth to the subscriber
eventually become large.
·
Ease
of Access: The NPS account
is manageable online. An NPS account can be opened through the eNPS portal.
Further contributions can be also be made online through the following eNPS
portals of CRAs: NSDL CRAKfintech
CRACAMS CRA
·
Once the PRAN account
is opened, an online login id and password is provided to the subscriber.
He/she can login and view/manage his NPS account online, over a click.
3. PMVVY – PRADHAN MANTRI VAYA VANDANA YOJANA
The
Government of India has introduced Pradhan Mantri Vaya Vandana Yojana
(Modified-2020), with
modified
rate of pension under this plan and extended the period of sale of this plan
for a further period of
three
years from Financial Year 2020-21 till 31st March, 2023. As per the terms and
conditions under this plan, guaranteed rates of pension for policies sold
during a year will be reviewed and decided at the beginning of each year by the
Ministry of Finance, Government of India. For the first financial year i.e.
upto 31st March 2021, the Scheme will provide an assured pension of 7.40% p.a.
payable monthly.
LIC
of India is solely authorised to operate this scheme. it provides assured
returns for ten years.
This
scheme can be purchased offline as well as online. To Purchase this scheme
online please log on
to
our website www.licindia.in.
Benefits Pradhan Mantri Vaya Vandana Yojana
- The PMVVY
scheme offers the beneficiaries assured returns of 8% per annum on their
deposits.
- The
returns or the pension is paid for ten years, and the beneficiary can
choose the tenure of payment.
- Individuals
can invest a minimum of Rs. 100
and a maximum of Rs. 15 lakhs in
PMVVY pension scheme, accordance with the
2018–19 Budget..
- In the
event of the individual's death before the end of the scheme, the
principal amount is credited to the nominee's account.
- Individuals
investing in PMVVY can exit from the scheme prematurely only in the event
of critical illness. However, in such cases, a 2% penalty will be levied.
- On survival of the Pensioner during the policy term of 10 years, pension in arrears (at the end of each period as per mode chosen) shall be payable.
- On death of the Pensioner during the policy term of 10 years, the Purchase Price shall be refunded to the beneficiary.
- On survival of the pensioner to the end of the policy term of 10 years, Purchase price along with final pension installment shall be payable.
The government raised the highest purchase cost
of Rs. 15 Lakhs in PMVVY is a one-time lumpsum investment scheme
for 10 years with an option to receive a regular income either monthly,
quarterly, half-yearly or annually, in the form of pension
4. VPBY – VARISHTHA PENSION BIMA YOJANA
The LIC Varishtha Pension Bima Yojana is available
for citizens aged above 60 years. There is no maximum age limit under this
yojana
Varishtha
Pension Bima Yojana is a government pension scheme for senior
citizens that offers guaranteed returns and income security. The
scheme provides annuity pay-out to the old aged in the form of an immediate
annuity plan.
The
VPBY, which is also known as LIC VPBY, is implemented through LIC, and the
individual must pay the premium of their choice at the start of the policy.
The
plan stipulates that the member must pay their desired premium at the beginning
of the period. They pay this charge and then they are eligible for a regular
pension.
It offers an assured pension based on guaranteed returns of 8% per annum for
ten years. This pension scheme for senior citizens gives the individual the
option to choose the premium payment mode; they can choose to receive the
pension monthly, quarterly, half-yearly or annual basis.
Benefits of Varishtha Pension Bima Yojana
- All payments under the VPBY policy
are made through ECS or NEFT.
- It offers an assured pension with
guaranteed returns at 8% interest rate per annum, which is higher than
several other senior citizen pension schemes.
- The scheme offers individuals a
free-look period of 15 days from the date of receiving the policy
documents. This means if the member wants to discontinue the policy, they
can without incurring any charges.
- The premium paid under this policy
is eligible for tax benefit under Section 80C of the Indian Income Tax
Act.
- Individuals can apply for a loan
against their VPBY policy after three years of buying the policy.
Individuals can get up to 75% of the policy amount as loan.
- The scheme encouraged pensioners to remain invested for a long time with a lock-in period of 15 years.
5. IGNOAPS – INDIRA GANDHI NATIONAL OLD AGE PENSION SCHEME
The National Social Assistance Program was
launched by India's Ministry of Rural Development in 2007. This program's
preliminary objective is to offer its beneficiaries security by delivering
pensions for senior residents, widows & disabled individuals.
It
is popularly known as NSAP (National Social Assistance Programme).
Benefits of Indira Gandhi National Old Age Pension Scheme
- This pension scheme for senior
citizens provides them with a monthly pension to help take care of their
old age expenses.
- It is a non-contribution
government pension plan, which means that the beneficiary must not
contribute any amount to get the pension.
- The beneficiaries aged between
60-79 years are entitled to get a monthly pension of Rs. 200, and
beneficiaries aged over 80 years get a pension of Rs. 500.
- A
monthly pension of Rs 600 - Rs 1000 depending upon the
state share of the pension.
- The pension amount is directly
credited to the beneficiary's bank account or post office account.
- Only
government employees are eligible for receiving a pension under the old
pension scheme after retirement
FINAL WORD ON PENSION SCHEMES FOR SENIOR CITIZENS
Thus, there are many pension schemes for senior
citizens in India. It is advisable to start investing in a pension scheme for
your choice from an early age so that you can build a decent corpus over time
and live a financially independent life post-retirement.
FAQ:
1.WHAT ARE THE PENSION SCHEMES FOR SENIOR CITIZENS?
Along with other novel changes that come with
getting older is retirement. Beyond a specific age, some tasks that appeared
effortless a few years ago often become a burden. In circumstances where it
becomes difficult to make an income consistently, pension plans act as a
lifeline.
People who have worked for a living their entire
lives may find retirement to be a little unsettling. The government has
introduced a number of programmes to promote both economic security and
stability after retirement by carefully weighing these considerations. Pension plans were specifically created to offer specialised
financial security after retirement and to support the country's economic
growth.
2.WHAT BENEFITS DO SENIOR CITIZENS GET IN INDIA?
To help senior folks in India live stress-free lives, the Indian government offers a number of perks. Senior residents in India are eligible for income tax credits, reductions on train and plane travel, and higher deductions for health insurance premiums. They also benefit greatly from the numerous senior citizen plans listed below.
3.WHAT IS THE CURRENT PENSION SCHEME IN INDIA?
The NPS is a retirement
savings scheme launched by the government of India with an objective to secure
the life of an individual financially after retirement. The eligibility
criteria for NRIs who want to open an NPS account are. The individual should
age between 18 years -60 years.
While the old pension scheme is a
pension-oriented scheme, the NPS
is an investment cum pension scheme where a part of the money is invested in
the market, thus generating more returns.
4.How
do I get a 50000 pension per month?
So, to get Rs 50,000
per month or about Rs 6 lakh per year, you need to invest about Rs 80
lakh. Senior Citizen Savings Scheme (SCSS) is a safer option having annual
interest rates of 7.4 per cent, but you can invest only up to Rs 15 lakh in
each scheme.
5.WHAT IS THE SAFEST INVESTMENT FOR SENIORS CITIZENS?
Many senior citizens look for high-return
investment opportunities that can increase their financial security. However,
the ideal investment provides adequate profits while assuring outstanding
safety. Consequently, having a varied investment portfolio and investing in
risk-free investment options are equally crucial.
To enjoy the comforts of retirement, seniors
need an investing alternative. Even while they provide great stability, the
majority of post-retirement investment options are sadly not profitable enough.
For a senior to generate enough money and protect their savings, they must
strike a balance between low to medium risk and secure prospects.
Senior Citizen Savings Program, Post Office
Monthly Income Program, Tax-Free Bonds, as well as Debt Funds are some of the
best investing choices. You can also opt for Senior Citizen Fixed Deposit.
Now you can download the Online App to get the Life Certificate for continuation of pension.
Click below link -
DISCLAIMER
The
information contained herein is generic in nature and is meant for educational
purposes only. Nothing here is to be construed as an investment or financial or
taxation advice nor to be considered as an invitation or solicitation or
advertisement for any financial product. Readers are advised to exercise
discretion and should seek independent professional advice prior to making any
investment decision in relation to any financial product. We are not liable for any decision arising out of the use of this
information.